AMENDMENT TO THE SHARE PURCHASE AGREEMENT
AMENDMENT TO THE SHARE
PURCHASE AGREEMENT
This
Amendment (the “Amendment”) to the Share
Purchase Agreement dated December 16, 2008, as amended on January 13, 2009 (the “Share Purchase Agreement”), by
and among the parties thereto as set forth below, is entered into on June 23,
2010 by such parties.
(i)
China TopReach Inc., formerly known as ChinaGrowth South Acquisition
Corporation, an exempted company incorporated under the laws of the Cayman
Islands (“Buyer”);
(ii)
each of the entities listed on Exhibit A-1 of the Share Purchase Agreement
(collectively, the “Sellers”, and each a “Seller”);
(iii)
Xxxx Xxx, a PRC resident with PRC Identity Certificate No. 350121196508130039;
and
(iv)
Olympia Media Holdings Limited, an exempted company incorporated under the laws
of the British Virgin Islands (the “Company”).
The
parties listed above are referred to hereinafter collectively as the “Parties” and individually as a
“Party”. Terms used
herein but not otherwise defined shall have the meanings set forth in the Share
Purchase Agreement.
RECITALS
1.
Under the Share Purchase Agreement, a portion of the consideration payable by
the Buyer to the Sellers in exchange for the entire issued share capital of the
Company included the following:
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(i)
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2,000,000
Buyer Shares which were to be held in escrow and released upon the
achievement by the Buyer of financial targets for the 2008 and 2009
financial years (the “Escrow Shares”);
and
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(ii)
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an
aggregate of 9,500,000 Buyer Shares to be issued to the Sellers upon the
Buyer achieving certain financial performance targets, as follows: 2009
financial year (2,000,000 shares), 2010 financial year (2,500,000 shares),
2011 financial year (2,500,000 shares) and 2012 financial year (2,500,000
shares). These 9,500,000 shares are collectively referred to
herein as the “dddddddEarn-Out
Shares”.
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2.
Pursuant to a board resolution of the Buyer of October 10, 2009 (the "Board Resolution"), the
2,000,000 Escrow Shares were released on October 10, 2009 to the Sellers and
Jiangyuan International Development Limited ("Jiangyuan"). The Company, Keep
Profit International Capital Limited ("Keep Profit") and Jiangyuan
had entered into an equity transfer agreement on December 6, 2008 wherein Keep
Profit agreed to sell shares in the Company to Jiangyuan. As Keep Profit
subsequently sold its shares in the Company to the Buyer before the transfer of
shares in the Company to Jiangyuan was completed, Keep Profit instead
transferred Buyer Shares to Jiangyuan on January 27, 2009. Thereby, Jiangyuan
became entitled to a relevant portion, 50,748, of the Escrow Shares. Such
release of the Escrow Shares was made without consideration of whether the 2008
and 2009 After-Tax Profits targets as originally stipulated in the Share
Purchase Agreement were achieved.
3. As
disclosed in the Buyer's Form 6-K Report of Foreign Private Issuer filed with
the U.S. Securities and Exchange Commission on March 24, 2010 (the "Form 6-K"), ShiFang Holding
Limited, a subsidiary of the Buyer ("ShiFang"), completed a private
placement transaction on February 12, 2010 (the "Private Placement"), and in
connection with the Private Placement, each of TopBig International Development
Limited (“TopBig”),
Blazing Sun Holdings Limited (“Blazing Sun”) and Keep Profit
provided certain collateral and guarantees to the purchasers in the Private
Placement, and surrendered all rights and entitlement to the number of Earn-out
Shares allocated to them under the Share Purchase
Agreement. Following such surrender, the number of Earn-out Shares
was reduced to 4,000,000.
4.
Pursuant to the Board Resolution and a board resolution of the Buyer of March
31, 2010, as compensation for the collateral and guarantees provided to
facilitate the Private Placement and the surrender by them of all rights or
entitlement to any Earn-out Shares, the Buyer allotted and issued an aggregate
of 5,500,000 Buyer Shares as follows: to TopBig 3,309,813 shares, to Blazing Sun
1,530,712 shares and to Keep Profit 659,475 shares. The early release of the
Escrowed Shares without regards to the achievement of the financial targets, and
the allocation and issuance of the Buyer Shares described in this Paragraph, are
hereinafter together referred to as the "Share
Transfers".
5. The
Parties desire to amend the Share Purchase Agreement to ratify the Share
Transfers and to waive and release any claims that may have arisen in relation
to the Share Transfers pursuant to the terms set forth herein.
;
Now
therefore, in consideration of the mutual covenants contained in this Amendment
and the Share Purchase Agreement as well as other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be bound, do agree as hereafter provided:
ARTICLE
I
AMENDMENT AND
SUPPLEMENT
1. The
following shall be added as Section 1.2(e) to the Share Purchase
Agreement:
"(e) The
2,000,000 Escrow Shares referred to in Section 1.2(b) herein have been released
to the Sellers and Jiangyuan without consideration of whether the Buyer has
achieved either the 2008 After-Tax Profits target or the 2009 After-Tax Profits
target and the release of Escrow Shares pursuant to the board resolution of the
Buyer of October 10, 2009 is hereby confirmed and ratified."
2. Section
1.3(a), (b), (c), (d) and (e) are hereby deleted and replaced with the
following:
"(a) In
consideration for providing collateral and guarantees to facilitate the
consummation of a private placement by the Buyer, the surrender by them of all
rights or entitlement to any Earn-out Shares and the additional risk assumed in
connection thereto (all as disclosed in the Form 6-K), the Buyer has issued an
aggregate of 5,500,000 ordinary shares of the Buyer as follows: 3,309,813 shares
to TopBig, 1,530,712 shares to Blazing Sun and 659,475 shares to Keep Profit.
The issue and allotment of 3,309,813 shares to TopBig, 1,530,712 shares to
Blazing Sun and 659,475 shares to Keep Profit pursuant to the board resolutions
of the Buyer adopted on October 10, 2009 and March 31, 2010 and the surrender by
TopBig, Blazing Sun and Keep Profit of all of their respective rights or
entitlements to any Earn-out Shares is hereby confirmed and
ratified.
(b) The
Buyer upon execution and delivery of this Amendment will allot and issue an
aggregate of 2,000,000 Earn-out Shares to the following Sellers as stated below
regardless of whether any After-Tax Profits targets in any year were achieved by
the Buyer:
Index
Asia Pacific Limited
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1,121,232 | |||
Luck
Smart Limited
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255,434 | |||
Wing
Keen Management Limited
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84,908 | |||
Adoration
Management Limited
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133,760 | |||
Aotian
Holdings Ltd.
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404,666 |
(c) An
aggregate of 1,000,000 Earn-out Shares may be allotted and issued by the Buyer,
contingent upon, and as soon as practicable after, the achievement by the Buyer
of After-Tax Profits of RMB278.8 million (approximately US$41 million) in the
2011 financial year, and an aggregate of 1,000,000 Earn-out Shares may also be
allotted and issued by the Buyer, contingent upon, and as soon as practicable
after, the achievement by the Buyer of After-Tax Profits of RMB394.4 million
(approximately US$58 million) for the 2012 financial year.
The
number of Earn-out Shares to be issued by the Buyer to the following Sellers
upon achievement of the After-Tax Profit target by the Buyer is set forth below
for each of 2011 and 2012:
2011
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2012
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Index
Asia Pacific Limited
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650,907 | 650,907 | ||||||
Luck
Smart Limited
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141,908 | 141,908 | ||||||
Wing
Keen Management Limited
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47,171 | 47,171 | ||||||
Adoration
Management Limited
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74,311 | 74,311 | ||||||
Aotian
Holdings Ltd.
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85,703 | 85,703 |
The final
2,000,000 Earn-out Shares described in this Section 2(c) are hereinafter
referred to as the "Remaining
Earn-out Shares".
The
following shall be added as Section 1.3(d), (e) and (f) to the Share Purchase
Agreement:-
"(d) The
Buyer shall use its reasonable best efforts to cause its common stock to be
traded on the NASDAQ National Market or the NASDAQ Capital Market (together,
"Nasdaq") within six (6)
months after the proposed listing ("ShiFang Listing") of ShiFang
on The Stock Exchange of Hong Kong Limited (the "HKSE") is completed, provided
that establshing such trading market does not violate any rule, regulation or
policy of the HKSE applicable to ShiFang."
"(e) If
for any reason the Buyer's common shares are not traded on Nasdaq within six (6)
months after the ShiFang Listing, the Buyer shall distribute (the "Distribution") all shares of
ShiFang held by the Buyer ("Relevant ShiFang Shares")
among all of the Buyer's shareholders of record at the time of Distribution. The
Distribution is subject to ShiFang's compliance with the the rules governing the
listing of securities on the HKSE, any requests of the HKSE, any
undertakings entered into in response to the requests, regulations or policies
of the HKSE and all other legal and regulatory requirements applicable to
ShiFang. In addition, the Distribution shall only be
effected:
(1)
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After
all the outstanding Buyer warrants or options have been surrendered or
exercised or have lapsed without exercise. As of the date of this
Amendment, the Buyer had 5,913,500 warrants outstanding and unexercised,
each warrant entitling its holder to subscribe for one Buyer Share at the
exercise price of US$6.00, which warrants will all have expired by 5:00
p.m. New York time on January 23, 2011;
and
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(2)
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After
the Remaining Earn-out Shares have been dealt with in a manner acceptable
to and mutually agreed by the Parties. In this regard, if (x) the
shareholders having rights to the Remaining Earn-out Shares indicate to
the Buyer that they would like to accelerate the vesting of the Remaining
Earn-out Shares to facilitate the Distribution then (y) a discount rate
shall be applied to ensure that the accelerated vesting is fair and
reasonable to all shareholders of the Buyer and, accordingly, the relevant
discounted proportion of the Remaining Earn-out Shares may be issued to
such shareholders immediately prior to the Distribution conditional upon
such shareholders waiving their right in respect of the any Remaining
Earn-out Shares not so issued. The exact rate of such discount shall be
subject to agreement between the Buyer's shareholders and, if necessary,
the approval of the Buyer’s shareholders in an extraordinary general
meeting; and
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(3)
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After
any lock-up periods or similar requirements imposed by the sponsors and/or
the HKSE on any Relevant ShiFang Shares have expired or have been lifted
or released. In this regard, the Buyer will use its reasonable efforts to
persuade the sponsors and the HKSE to impose the minimum lock-up period
acceptable to them.
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(f) The
Buyer shall complete the filing with the U.S. Securities and Exchange Commission
of a registration statement as soon as practicable following the date of this
Amendment to enable the free trading of the Buyer Shares held by existing
shareholders of the Buyer."
ARTICLE
II
SUPPLEMENT, RELEASE AND
WAIVER OF CLAIMS
Except
for obligations arising out of this Amendment, each Party to the Share Purchase
Agreement and to this Amendment hereby waives and releases any and all claims of
any kind, howsoever defined or described, that such Party may have against any
other Party. Without limiting the generality of the foregoing, each
Party waives and releases any and all claims they may have against any other
party relating in any way to (i) the shareholding structure of the Buyer, any of
its subsidiaries or affiliates, or the Company, and any of the transactions
relating to the shareholding structure of the Buyer, its subsidiaries and
affiliates, and the Company, and all the transactions conducted by the Buyer
from the date of the Share Purchase Agreement through the date hereof; (ii) all
the transactions referred to in Form 6-K; (iii) the ShiFang Listing; (iv) the
Share Transfers and/or (v) any other matters directly or indirectly related to
the items set forth in (i) to (iv); and each Party hereby covenants not to bring
any claims or take any other action against any of the foregoing in relation to
the items set forth in (i) to (iv).
ARTICLE
III
MISCELLANEOUS
1. The
remaining terms of the Share Purchase Agreement, are ratified and approved and
shall remain in full force and effect.
2. The Parties agree that the Earn-out
Shares which have been distributed, have been distributed as set forth herein,
that no Earn-out Shares have been distributed in any other manner except as set
forth herein and that no Earn-out Shares shall be distributed except as set
forth herein.
3. The
Share Purchase Agreement and this Amendment constitute the entire agreement of
the parties with respect to the subject matter of the Share Purchase Agreement,
and supersede all prior negotiations, agreements and understandings with respect
thereto. This Amendment may only be amended by a written document duly executed
by the Parties.
4. Each
of the Parties undertakes to use its best efforts to complete the
ShiFang Listing, including but not limited to providing all information and
assistance, signing all relevant documents as reasonably required and taking all
steps necessary to execute and perfect the share transfers described herein as
reasonably required. Each of the Parties hereby irrevocably consents to the
disclosure in the public offering documentation and other marketing materials
relating to the ShiFang Listing of its name and the disclosure of any relevant
information relating to such Party.
5. Each
of the Parties expressly represents and warrants that the execution and
performance of this Amendment, and compliance with its respective obligations
herein and in the Share Purchase Agreement, are fully authorized by such Party,
that it has the power (corporate or otherwise) to enter into this Amendment on
behalf of itself and all persons stated by the terms hereof to be bound by its
execution hereby, and that the person or persons executing this Amendment on its
behalf have the necessary and appropriate authority to do so, and once executed,
this Amendment shall constitute the valid and legally binding obligations of
such Party in accordance with its terms and obligations.
6. This
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York.
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the
date first written above.
CHINA
TOPREACH, INC. (formerly known as CHINAGROWTH SOUTH ACQUISITION
CORPORATION)
By:
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/s/
Xxxx Xxx
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Name:
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Xxxx
Xxx
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Title:
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Chief
Executive Officer and Director
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OLYMPIA
MEDIA HOLDINGS LIMITED
By:
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/s/
Xxxx Xxx
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Name:
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Xxxx
Xxx
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Title:
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Chief
Executive Officer and Director
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INDEX
ASIA PACIFIC LIMITED
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TOPBIG
INTERNATIONAL DEVELOPMENT LIMITED
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By:
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/s/
Xxxxxxxxx Xxxxxxxx
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By:
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/s/
Xxxx Xxx
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Name:
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Xxxxxxxxx
Xxxxxxxx
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Name:
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Xxxx
Xxx
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Title:
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Authorized
Representative
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Title:
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Director
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BLAZING
SUN HOLDINGS LTD.
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LUCK
SMART LIMITED
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By:
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/s/
Hong Peifeng
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By:
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/s/ Xxx Xxxxxx
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Name:
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Hong
Peifeng
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Name:
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Xxx
Xxxxxx
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Title:
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Authorized
Representative
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Title:
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Authorized
Representative
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WING
KEEN MANAGEMENT LIMITED
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KEEP
PROFIT INTERNATIONAL CAPITAL LIMITED
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By:
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/s/
Zhang Jingui
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By:
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/s/
Xx Xxxxxxx
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Name:
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Zhang
Jingui
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Name:
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Xx
Xxxxxxx
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Title:
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Authorized
Representative
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Title:
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Authorized
Representative
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AOTIAN
HOLDINGS LTD.
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ADORATION
MANAGEMENT LIMITED
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By:
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/s/
Shi Chanjuan
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By:
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/s/
Xxxx Xxxxxx
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Name:
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Shi
Chanjuan
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Name:
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Xxxx
Xxxxxx
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Title:
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Authorized
Representative
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Title:
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Authorized
Representative
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JIANGYUAN
INTERNATIONAL DEVELOPMENT LIMITED
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XXXX
XXX
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By:
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/s/
Xxx Xxxx
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By:
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/s/
Xxxx Xxx
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Name:
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Xxx
Xxxx
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Name:
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Xxxx
Xxx
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Title:
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Authorized
Representative
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